SMALL CAP MOVERS: Slow down as holiday season approaches, with signs of recovery ahead

It was a fairly quiet week for trading in the small cap market as volumes remained low.

Some investors are beginning to wind down early for the Christmas break, while others continue to sit on their hands amid the broader economic uncertainties.

Standing at 3,072 today the small cap benchmark FTSE AIM 100 was down 1 per cent on the week, while the broader AIM All edged just 0.5 per cent lower.

The trend is starting to point to a strong recovery, despite slowdown over the Xmas period

'Small cap opportunities are still evident,' said Atif Latif, director of trading at Guardian Stockbroker. 'News flow is starting to turn positive and we think this will continue to attract attention as the trend is starting to point to a strong recovery and this will enable those that missed the initial move up to buy back into the growth stories.'

It was a week largely dominated by mining in the small cap market. The week started with a flurry of announcements from the sector, ahead of the annual Mines & Money conference in Islington, London.

Many of AIM mining stocks were able to prime the market with upbeat news, giving the two days to talk up their projects with fresh enthusiasm.

More...

Baobab Resources (up 4 per cent today at 15.38p) was the week’s biggest winner doubling in value at one point after a major resource upgrade pointed to the possibility of the Tete pig iron project, in Mozambique, becoming the world’s largest.

At 665million tonnes the project’s new resources increased by almost 40 per cent. Managing director Ben James said the upgrade elevates the project from ‘world class’ to ‘world first’.

The company is currently undertaking a preliminary feasibility study at Tete that will assess a series of scenarios at production rates of one million tonnes per annum (Mtpa), 2Mtpa and up to 4Mtpa – at this end of the range it would be the world's largest pig iron project by output.

Another firm finding favour was Africa Consolidated (unchanged today at 3.12p) which gained almost 40 per cent this week.

On Tuesday a hefty value was attributed to a second possible open pit mine at its Pickstone-Peerless Gold project in Zimbabwe.

A preliminary economic assessment concluded that a new high grade pit could produce 50,000 tonnes of ore per month and a mined grade of 4.6 grams per tonne - yielding 720,000 ounces of gold over a 10 year life.

Orosur (up 5.5 per cent today at 38p) kept the positive mining news coming today as it said it would meet its full year target, after it produced 14,000 ounces of gold in November. Importantly its underground development work to access the higher grade Arenal Deeps area is on track for completion by February.

South Africa-focused Bushveld Minerals (unchanged today at 12p) moved closer to its goal of defining a 1billion-tonne resource at the Bushveld iron project on Wednesday. It added 107million tonnes to the project, taking total resources to 740million tonnes.

Ethiopia-focused Nyota (unchanged today at 4.22p) reached a key milestone yesterday as a definitive feasibility study demonstrated that the proposed Tulu Kapi mine would be economic.

It showed the mine could generate revenues of US$1.4billion over a ten-year life. The economics of study showed production of 924,000 ounces of gold at cash costs of US$600 an ounce, after an initial capital start up cost of US$221million.

Judging by the share’s performance, investors were somewhat underwhelmed with the findings, and analysts pointed to further scope for improvement. Meanwhile the company’s focus is now on securing project finance so it can get on and build the mine.

Bullabulling Gold (down 4 per cent today at 6p) on Monday released new and improved figures for its proposed mine in Western Australia. The company is now working to incorporate the new economics into the pre-feasibility study, which is now being finalised.

Spain-focused mine developer Ormonde (unchanged today at 6.12p) raised £1.4million on Tuesday to support the firm as it continues to discuss project financing options as it move towards the start of work on the proposed Barruecopardo tungsten mine.

Meanwhile, Ariana Resources’ (unchanged today at 1.3p) Red Rabbit project, in Turkey, is set to move forward too after it received forestry permits for the Kiziltepe part of the project.

Explorers Alecto (unchanged today at 1.18p), West African Minerals (unchanged today at 58.5p) and Stratex (unchanged today at 4.88p) were also in the news. Elsewhere, there was also talk of takeovers and tie-ups.

And following heightened speculation AIM-quoted Afferro (up slightly today at 76.12p), which is developing an iron project in Cameroon and sold one key asset last year, confirmed it was in negotiations with multiple parties.

Afferro shares are up around 25 per cent this week, and have now nearly doubled since the start of October.

Emerging African airline Fastjet (unchanged today at 3.68p) was one of the main features outside of the mining sector. Indeed, it was a particularly busy week for the company which is working to establish itself as a pan African carrier.

On Tuesday it said it may acquire the assets of South African 1time Airline which ceased trading last month. The next day it confirmed it was in talks with Emirates over a potential partnership.

Meanwhile network software firm Endace (down slightly today at 477.5p) was a big mover, gaining around 60 per cent, after it received a premium takeover bid of 500p a share from New Zealand IT group Emulex yesterday.

Oil juniors Wessex (unchanged today at 4.9p) and Northern Petroleum (down 0.5 per cent today at 51.75p) were among the fallers after the Shell-led Guyane exploration venture got disappointing results from its latest well.

The AIM quoted stocks each shed 20 per cent on the news, however with three more wells being drilled in the months ahead there are more chances for this programme – which follows up last year’s Zaedyus discovery.